Tyler Nichols writes: “I am done with the freemium model“.
Tyler divided all the users of his service into two groups: free and paid.
He measured the behaviors of each group.
He found that the free group was detrimental to his business because:
- They emailed more questions on average than paid people.
- They hit the spam button when he emailed them with a follow-up, paid people didn’t.
- Free customers were not worth the maintenance costs they caused.
Hacker News and other communities replied (paraphrased):
- Free people were not as engaged, and therefore more wreckless.
- It was a santa letter generator, which has low repeat value after the season.
- The plural of anecdote isn’t evidence, you’ve added little value to freemium business model discussion.
- Freemium apps can be monetized by way of ads.
- The conversion rate from ‘free’ to ‘paid’ is generally very low, so the decision to go free must be placed into a broader strategic-competitor context.
- Maintenance on free customers can be managed by way of automated autorespond emails pointing people to the FAQ, at the opportunity cost of conversion to a paid fee.